Oakland County approves retiree health care refinance request

The first step in a long financial process was put into action as the Oakland County Board of Commissioners passed Executive L. Brooks Patterson's request to refinance the county's debt at a much lower interest rate on Certificates of Participation, or COPs.

COPs -- similar to bonds -- were issued in 2007 to fund the county's retiree health care obligation.

These complex, unique COPs, are the first issuance of their kind on the nation.

Money for the refinancing, approved Wednesday, will be raised through limited taxable general obligation (GO) bonds.

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Commissioner Shelley Taub, R-Bloomfield Township, said that the county is required to pay off the bonds in a specific amount of time.

"Because of the county's AAA bond rating, we'll get a lower interest rate," said Taub.

Oakland County Deputy Executive Bob Daddow said that with the market where it's at now, interest rates are very low on bonds and their COPs.

The passing of the resolution allows the county to act before August 2013 in case interest rates suddenly rise or retiree health care trusts begin to falter, said county officials in a prepared statement.

"The major bond ratings agencies tell us Oakland County is the best-managed AAA county in the nation," Patterson said in the Thursday release. "Last night's vote by the board of commissioners enables us to maintain our stellar fiscal reputation."

The refinancing, said Patterson, will save county taxpayers $100 million due to dropping interest rates -- from 6.2 percent in 2007 to 2.9 percent now.

Commissioner Dave Woodward, D-Royal Oak, said that while he -- without question -- supports the opportunity to take advantage of these low interest rates, he still has a deep concern for the relationship between the county's financial advising entity and its bond counsel.

John Axe, the county's bond counsel for nearly 40 years, shares an office building in Grosse Pointe Farms with his daughter's company, Municipal Financial Consultants, Inc., which happens to be the county's financial advisor.

"I firmly believe that bond counsel and financial advisor should not have a familial relationship," said Woodward. "It's inappropriate."

The commission's finance committee called a special meeting Wednesday before the larger board meeting, where it decided that the financial consultant spot for the company would be competitively bid out, said Michael Gingell, chairman of the board of commissioners.

Commissioner Taub explained in a phone interview Thursday that bids for the position would be put before a review board with letters designated instead of company names.

"That means the board won't know exactly who bids," said Taub, who sits on the board's finance committee. "They'll only see the actual bids."

From his seat on the left at the board meeting, Woodward said that if the bid process goes forward and comes back with the exact same firm as the financial advisor, he would feel "fleeced."

Bill Dwyer, the county commissioner from Farmington Hills, said Thursday it's all about saving money for taxpayers.

"As a county, it's a win-win," said Dwyer.

He said as far as letting MFCI bid competitively: "Why wouldn't we?"

"The county is not going to tolerate any type of favoritism," said Dwyer. "We obviously want everything to be transparent, but they certainly should be allowed to bid."

Although this is the first step in a long process for the county, Taub said the whole refinancing could be a blessing in disguise.

"Since interest rates have gone down, and if we get this done quickly, we'd save taxpayers even more money than we would've if we had stuck with the COPs," she said.

"The bottom line is this: issuing these bonds will ultimately eliminate a healthcare liability off our balance sheet," Gingell said.

For more information on the Oakland County Board of Commissioners, visit